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Obama and the Dow: A Boom on the Horizon?

Is it time to panic again because the stock markets are down—currently by 330 points—following Obama's victory? The historical evidence suggests the opposite, contrary to the widespread myth that the economy does better under Republican watch. In reality, the strong correlation between positive stock market performance and Democratic presidencies means you may want to wait till this administration is out of the White House and then buy on Inauguration Day. Here are two graphs that use different measures of market performance to show the relationship. The first displays S&P performance and takes into account George W. Bush's presidency, as of October 10, 2008:

The second shows the performance of stocks relative to bonds up through 1999.

See also this page and this study (pdf) for proof that GDP, employment, and corporate profits are all higher under Democratic leadership.